Undone by policy

......The RBI has raised rates 13 times since March 2010, while acknowledging the relative ineffectiveness of monetary policy in tackling cost-push inflation. Now, high rates have caused producers to put expansion and growth on hold. Clearly, there is need for a more open debate on the RBI’s tardiness in altering its policy stance. And, more immediately, the case for a rate cut to rescue growth strengthens daily..............

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Growth and inflation

The article “RBI confronted with multiple concerns” (Business Line, December 12.) rightly pointed out the issues before the RBI in the monetary policy review on December 16. So far, it was observed that to tame inflation, raising key rates resulted in rising lending rates by banks and reduction in growth rate. The question is: How far can we sacrifice growth to curb inflation and whether it is sustainable in the wake of reduction in foreign investment and, thereby, depreciation in the value of the rupee? Already, industrialists and loan borrowers are burdened with heavy interest charged by banks. The time has come for the RBI to begin the process of easing interest rates and check the continuous decline in the value of rupee. At the same time, the growth rate should not be allowed to fall further because of monetary policy decisions. A combination of growth and inflation of 7 per cent and 8 per cent would serve the economy well, provided the RBI eases interest rates, preferably starting with the ensuing monetary policy.

T. S. N. Rao (HBL)

Janata Seva Coop Bank fined Rs 5 lakh

BANGALORE: The Reserve Bank of India (RBI) has imposed a penalty of Rs 5 lakh on Janata Seva Cooperative Bank Limited, Bangalore, under sections relevant to Anti- Money ‘Laundering Guidelines’ violations. The RBI informed that it issued a show-cause notice to the bank, in response to which the bank is said to have submitted its side of the case. But after the hearing and other procedures, the RBI imposed a penalty of Rs 5 lakh on the Janata Seva Co-operative bank.

IBN Live

Consumer confidence in financial situation fell in Sept:Survey

The number of people who felt that their financial circumstances have improved fell to 56 per cent in September, from 59 per cent in June, as per the latest consumer survey by the Reserve Bank. However, optimism about an increase in future income, though high, has been sliding over the last four quarters, according to the sixth round of RBI''s ''Consumer Confidence Survey September 2011''. "Though more than half of the respondents felt that their household circucmstances have become better off, this proportion has declined as compared to June 2011," the survey said. About 18 per cent respondents reported that their household circumstances became worse off due to increase in price level. "This proportion has declined during the last four quarters, from 27.5 per cent in December 2010 to 17.7 per cent in September 2011," the RBI said. The survey had 5,400 respondents from six metropolitan cities -- New Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad -- and was conducted in September this year. It found that optimism regarding increase in future income remain high, but has declined in absolute terms. A total of 66 per cent of respondents said they expect their incomes to rise during the next one year period, down from over 69 per cent who had the same view in June 2011. "About 71 per cent of the respondents reported increase in spending as compared with a year ago. This proportion in response to future spending is less at 66 per cent," the survey found. The study also found that nearly three-fourth of the respondents were of the view that the current interest rates are high from borrowers viewpoint. The degree of negative perceptions on price levels for now as well as in future are down marginally in September 2011 as compared with June 2011. "However, about 85 per cent of the respondents felt that prices would continue to increase during the next year," it said. RBI started conducting the quarterly survey on consumer confidence in 2010. According to it, the change in consumer confidence has the potential to affect real economic activities through the changes in business sentiments and the findings of the survey on confidence level of consumers can be of use for policy making purposes.

MSN News

Positive perceptions on current economic conditions decline: RBI survey

.“The change in consumer confidence has the potential to affect real economic activities through the changes in business sentiments. Thus, the current and expected confidence on economic and personal financial situations, are of particular relevance for policy purposes,” said the survey. ............

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Former RBI Deputy Governor Shyamala Gopinath joins Ernst & Young

MUMBAI: Shyamala Gopinath, former Deputy Governor of Reserve Bank of India, has joined the global advisory council of professional services firm Ernst & Young, signalling the growing significance of the Indian market for the Big Four accounting firms and underscoring the intention of the company to realign as per strict governance norms globally.  Gopinath has been appointed as an independent non-executive to the top governance body of the global assurance, tax, transaction and advisory leader, to advise on policy and strategy.  The appointment of one of India's leading former regulators on the global council of a professional services firm comes at a time when the European Union has suggested a draft law to split the world's top four audit firms to crack down on conflicts of interest and on shortcomings as highlighted by the recent financial crisis.  The Big Four typically refers to Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers. Gopinath is one of the five independent non-executives to be appointed by Ernst & Young. Earlier, in February 2011, the firm had appointed three independent non-executives. Concurrent with Gopinath's appointment, Ernst & Young also appointed Lim Hwee Hua, a former minister in the Prime Minister's office, government of Singapore, as an independent non-executive.  Ernst Young's global advisory council has the powers to approve appointments of key senior executives, including chairman, chief executive officer, and will also review their performances. The council shall also be involved in the management of reputational risks and other governance risks. Confirming her appointment, Gopinath said: "I am pleased to join Ernst & Young's Global Advisory Council as an independent non-executive member. This will provide me an opportunity to work together with some of the finest minds with a view to enhancing the role of professional services organisations."

ET 

Youth will determine India’s future: Subir Gokarn, Deputy Governor of RBI

This event has given an opportunity for the students to create a platform to build tomorrow’s CFOs and financial events like MONETA is the need of an hour,” he further  said. Think. Invest. Win, an annual event, organised by the students of R. A. Podar College of Commerce and Economics to drive industry interaction with academia and to create a platform to build tomorrow’s CFOs. Subir Gokarn, Deputy Governor of RBI was the Chief Guest for closing ceremony, while Yatrik Vin, Senior Vice-President – Finance & Accounts of NSE, J B Bhoria, Regional Director of RBI and Smt Supriya Patnaik, Chief General Manager of RBI were the guest of honour. While addressing students during the concluding day of annual fest, MONETA 2011 at R. A. Podar College of Commerce and Economics, here at Matunga, Subir Gokarn, Deputy Governor of RBI said that India’s future won’t simply be determined by powerful Chief Executing Officers and political leaders, but by its young people. “You are the future leaders, innovators, educators, entrepreneurs and organising such financial extravaganza like MONETA, enables students the ability and the financial acumen to handle various situations that may arise in the increasingly complex financial markets of today. This event has given an opportunity for the students to create a platform to build tomorrow’s CFOs and financial events like MONETA is the need of an hour,” he further said. At Podar, according to Dr s Shobana Vasudevan, Principle of R. A. Podar College of Commerce and Economics they strongly believe that real progress of India lies in development of rural population. “The key to this progress is connecting the villages with the modern world and bringing out the untapped potential of the larger mass. To maintain this gap, the students of Podar have resolved to impact financial literacy to those who do not have access to information but the urge to learn,” she stressed. Earlier, Subir Gokarn, Deputy Governor of RBI gave away a winner’s trophy to St Xaviers College of Arts and Commerce, Kolkata, who were declared winners of MONETA 2011. Bhopal Institute of Social Sciences were declared as the first runner-up, while B. K. Mazumdar Institute of Management, Ahmedabad were the second runner-up of MONETA 2011. According to Parth Popat, Chairman of MONETA 2011, Podar Moneta 2011 aspires to inspire students to cannily manage financial resources at their disposal through systematic planning, diligent application and judicial revision. “Our vision is to connect the theoretical knowledge of students to the real world and bring out potential financial wizards from amongst the student community, while our mission is to create a training ground for budding investors without being exposed to monetary loss,” he said. The event is sponsored by supported by National Stock Exchange (NSE), India Infoline Group, CNBC TV18, Entrepreneur, Woodland, DSP BlackRock Mutual Fund, Dena Bank, Super CFO, Close UP, Pond’s, Bright Outdoor Media Pvt Ltd and Croma.

http://www.indiainfoline.com/Markets/News/Youth-will-determine-Indias-future-Subir-Gokarn-Deputy-Governor-of-RBI/5308580200

Won an online lottery? Inform nodal agencies immediately

.......Several investors have been duped in the past and RBI has on several occasion cautioned the public not to fall prey. The latest RBI initiative goes a step further and provides a legal platform to lodge complaints regarding such incidents with ease. More complaints will help investigating authorities nab culprits........

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Bank password not so safe

Internet bank account hacking has now expanded to RBI’s much hyped One Time Password (OTP) security system. With few banks adopting OTP for online and credit card transactions, incidents of hacking have already been reported from Mumbai and Kolkata. Cyber security analysts say there are multiple risks involved in the OTP system. While a mobile service provider can reissue a SIM card, if not used for 3 months, a hacker can also avail of a duplicate sim card by producing fake identification documents. In one such case of hacking in Kolkata, the fraudsters have approached the mobile service provider with a fake voter’s ID of the bank customer and obtained a SIM card. The complainant filed under adjudication application. “The OTP has exposed the vulnerability of mobile phones in internet banking. While there is talk about poor ‘know your customer’ (KYC) procedure in the banking sector, we should not forget that KYC is equally weak in the mobile phone sector. In the Kolkata case, by the time the fraudster managed to obtain a duplicate SIM card, the original customer’s mobile phone was de-activated and even before he came to terms with the fault, the transaction had happened from his account,” cyber security adviser N.A. Vijayashankar said. In another case, the customer who had an online account went abroad and his attempts to de-register his account went in vain as the bank demanded his physical presence. Here again, his mobile number may get re-issued to a different customer by the mobile service provider. “Even if none of these compromises take place, hacking is still possible as fraudsters have been using malwares which these measures cannot thwart. Banks verify only login verification and not transaction verification. In the US, Federal Financial Institutions Examination Council (FFIEC) issued supplementary guidelines this June stating that OTP is vulnerable and explicitly states that transaction data verification should be done. Banks in our country can go for the next-generation technology which can guarantee both login and transaction verification”, said Mr Mohan Sundaram, who is CEO of firm Red Force Lab, which deals with cyber security solutions.

DC

ATMs to be made disabled-friendly

NEW DELHI: In what can be termed a much needed intervention for the differently abled , the office of the chief commissioner for persons with disabilities has written to the Department of Banking Operations and Development to make automated teller machines (ATMs) in the city disabled-friendly.  This move follows an RTI application and representation filed by a differentlyabled PhD scholar from Jawaharlal Nehru University, Kumar Nripendra Pathak, asking for making ATMs to be made barrier free for persons with disabilities.  In a letter dated December 5, 2012, the deputy chief commissioner in the office of the chief commissioner for persons with disabilities, under the Ministry for Social Justice and Empowerment has asked the banking operations and development department "to ensure that ATMs are made accessible to persons with disabilities in a time bound manner. Action taken in the matter may please be intimated to this office at the earliest".  Pathak said: "I noticed that for wheel-chair bound people and for people with other disabilities like me accessing ATMs are a tough ask. Most have no ramps and the height is also not right for people using wheel chairs. Simply put, we can't use the ATMs in their present state. Moreover , it is not safe to disclose our PIN number to anyone. I therefore filed an RTI with the Reserve Bank of India to find out what policies were in place for disabled persons. There I got to know of a Master Circular on Branch Authorisation of 2009 where banks were advised to provide all existing and future ATMs with ramps so that wheel chair users/ persons with disabilities can access them easily. The banks have not been adhering to the RBI directives since July 1, 2009.  The circular also asked the banks to make arrangements in such a way that the height of the ATM does not create an impediment in its use by a wheel chair user. Pathak in his representation pointed out that the directives are not being implemented by banks and cited the example of an ATM belonging to a national bank at the JNU campus . The letter from the office of the chief commissioner for persons with disabilities also cited Section 46 of the Persons with Disabilities Act, 1995 which provides for non discrimination against persons with disabilities.

TOI

Finance ministry pushes banks to fast-track bad loan recovery

MUMBAI: The finance ministry is pushing capital-strapped public sector banks to hasten recovery of bad loans to improve health, and has promised to fill vacancies at debt recovery tribunals (DRT) across the nation, partly responsible for inordinate delays in ending disputes.  "Needless to say that Rs 2 lakh crore (of bad loans) are a drag on the capital of banks," a bureaucrat from the finance ministry wrote to bank chairmen recently.  "All cases should be reviewed and... ensured that all cases pending above two years should be cleared by March 2012." Banks last year wrote off almost 10% of their gross bad loans as various recovery forums failed.  Recovery through DRTs fell to 28% of the total referred cases in 2011, from 32% ayear earlier, data from the Reserve Bank of India (RBI) shows.  Under the SARFAESI Act, it was a little better at 38%, compared with 30% in the same period previous year. Bankers had complained to the finance ministry that the DRT mechanism was not functioning efficiently, which in turn was making it difficult for them to recover dues. They had said the tribunals lacked presiding officers and recovery officers.

ET

Relax lending norms for loss-making units: Textiles Ministry to RBI

NEW DELHI: The Textiles Ministry has said it will urge the Reserve Bank to relax lending norms for the textile industry which has been hit by the volatility in raw material prices and slump in domestic demand. "Something needs to be done... something needs to be worked out regarding the asset classification (norms). Whether the Reserve Bank of India (RBI) let its guard down on some of the norms that is something we have to work very hard upon in this month," Textiles Secretary Rita Menon said. The Textiles Ministry has been following the matter with the RBI and the Finance Ministry after considering the industry's demand for resetting of bank loans worth Rs one lakh crore.

ET

RBI move, key numbers to decide stock market course

....... The other major economic reading - inflation - which is expected to fall to 9.04% in November from 9.73% in the previous month, may come as a relief to investors. Investors will closely watch the non-food component of the wholesale inflation data, which will be announced on Wednesday that is considered to be key to the outcome of RBI's rate-setting meet on Friday...........

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Big danger from a declining rupee for India

.... The Reserve Bank of India (RBI), the last line of defense against a currency meltdown, has cautiously begun to support the rupee, but its firepower may be more limited than its $300 billion in reserves would suggest..............

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CRISIS OF COMPETENCE - Economic policy in India has lost its focus

..... The deputy chairman of the Planning Commission (I remember) responded that inflation was bad but nothing should be done that would adversely affect growth. So for two years he and the government left the control of inflation to the Reserve Bank of India. The RBI used monetary policies of higher interest rates and a squeeze on liquidity. The liquidity squeeze was a failure since large inflows of volatile foreign institutional investment and non-resident Indian deposits kept supplementing the rupee supply. Interest cuts did not dampen inflation..............

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ACTION UNLIKELY; DIRECTION TO CHANGE

...... Slowing growth and lower inflation will encourage RBI to change its policy direction, but it may not happen too soon as inflation will remain higher than the policy rate, possibly till December, and even though food inflation is coming down sharply, we don’t know yet the level of the non-food manufacturing inflation, a proxy for core inflation...........

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Govt must contain inflation

Not to speak of the US and the Eurozone nations, the Indian economy, too, seems to have been passing through a difficult phase. Double-digit inflation, the falling growth rate, disinterest of foreign investors in India, rapid depreciation of the rupee against the American dollar, the virtual failure of the monetary policy so far pursued by the RBI to curb the deteriorating trend and, above all, the surprisingly indifferent attitude of the government, conveniently shifting the blame for the current worrisome situation to the global environment, surely indicate that the country is headed for large-scale unemployment and general unrest. To stall the rapid depreciation of the rupee, the government could probably impose a complete ban on the import of gold at least for the time being. It could also reduce to some extent the import of crude oil and introduce rationing of petrol and diesel to be used by individual vehicle users. Automobile companies could be persuaded not to import components till the situation improved. Domestic investors should be guided to abstain from investing in foreign as well as domestic equities so far as the flight of foreign capital from the economy continues. The RBI could use a limited amount of foreign exchange to purchase the rupee in the open market. Serious efforts should be made to earn more and more dollars through the export of Indian goods to the markets other than the US and the Eurozone. To fight inflation, the government should possibly try to find ways and means to stabilise the prices of petroleum products (curtail duties). There is nothing wrong in the RBI’s monetary policy of raising the interest rate. Its effectiveness seems to have been hampered by the ill-conceived taxation policy. So long as the rate of inflation remains higher than the rate of interest on bank deposits, total interest earnings should logically be exempt from income tax. This would make bank deposits more attractive for those who otherwise prefer to invest in gold, silver, etc, or increase their expenditure on consumption. Higher bank deposits could certainly increase the credit creating capacity of commercial banks at a lower rate of interest for industry, a higher repo rate of the RBI notwithstanding. This could ultimately lead to a reduction in the cost of industrial output as also a higher economic growth rate.

D N Tandon, Panchkula (The Tribune)

Bankers see stable lending in near term

Pratip Chaudhuri, Chairman, State Bank of India

.....“I don’t expect the lending rates to go up. I would expect the RBI to address the issue of liquidity as the industry has seen liquidity pressure,’’ .........

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RBI confronted with multiple concerns

....While formulating its policy for the upcoming review on December 16, the central bank is confounded with two additional problems. One is to prevent the slide of the rupee and the other is to address the liquidity deficit in the system. While the decline in capital flows to India has led the depreciation of the currency, additional government borrowing has created a liquidity shortage. ...........

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Interest in bank stocks to perk up ahead of Credit Policy

Stocks from banking space will remain in focus ahead of the Reserve Bank of India's Monetary Policy, which is scheduled to be held on December 16. Market participants are expecting at least 0.25 percentage point cut in cash reserve ratio (CRR) to improve liquidity in the system. Such a move to lower CRR (the amount banks are required to keep with the RBI), will help banks to lend more. CRR has been left unchanged at 6 per cent since May 2010. Recently, China cut CRR by 50 basis points effective December 5. In the last one-year period, the BSE Bankex fell 21.89 per cent against the BSE Sensex's decline of 16.89 per cent and BSE-500's 19.11 per cent. If RBI follows China, not only banking stocks (due to higher loan offtake), the overall market will see an improvement in sentiment due to enhanced liquidity.

HBL

RBI’s Dec 16 policy review to take note of forex volatility

Bhubaneswar: The Reserve Bank of India (RBI) is hopeful that there would be some improvement in the foreign exchange volatility in coming days. “In view of the European Union Summit we are expecting that there would be some corrections in the value of rupee,” said RBI Deputy Governor Harun Rashid Khan. He said that the outcome of the summit would bring some comfort to the world economy.  “RBI policy review on December 16 would take note of the foreign exchange volatility besides the problem of inflation and the NPAs of banks,” Khan said on the sidelines of a regional seminar on securities market, organised by Bhubaneswar Stock Exchange, on Saturday. The deputy governor said that the euro zone crisis has its impact on the Indian economy. India used to get funds from European banks, he said and added, “Now that the European banks are in trouble, the funds flow to the country would be dried up.” The country's commerce is going to be affected as India's export to European countries is about 20 to 30% of its total exports.  There would flight of capital as the Foreign Financial Institutions (FIIs) would withdraw from the stock market. Commodity prices is going to be affected as the country is importing about 70 to 80% of its fuel requirements. The nation also is going to face the problem of contamination as India's global integration index has gone up over the years.  The seminar was addressed by Sebi executive director J Ranganayakulu, CSE MD & CEO Madhab Reddy, Nalco company secretary KN Ravindra, Bhubaneswar Stock Exchange chairman Vivek Pattanayak, and CEO Debraj Biswal. 

FE

As growth stalls, RBI will start cutting rates in early 2012

........ While the 6.9 percent figure was largely on expected lines given the signs of slowdown, all eyes are on Reserve Bank Governor Duvvuri Subbarao and Mint Road mandarins once again. The expectations are that, with investment slowing down, an unwinding of the interest rate cycle has now become an imperative. The Reserve Bank of India is to unveil its Mid-quarter Review of Monetary Policy on 16 December.........

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Noteworthy: Rs 500 minting up 17 fold in 10 yrs

There has been a fundamental change in what is sitting in an Indian's wallet: it's got more peach-pink and moss-green than ever before. The appetite for the big bills - Rs 1,000 and Rs 500 - is growing furiously. The figures tell the story. The number of Rs 500 notes minted across the country has grown almost 17 fold in the last decade, from 213 million pieces in 2000-2001 to 3,543 million pieces in 2009-10. The number of Rs 1,000 notes minted annually has grown nearly nine times, from 115 million in 2000-01 to 1,008 million in 2009-10. Today, there are fewer notes of Rs 20 and Rs 50, whether individually or collectively, than the total number of Rs 500 notes out there. These notes have quietly disappeared from automated teller machines with the value of every cash withdrawal rising. "Growth in the value of banknotes outpaced that of volume, reflecting the continuing compositional shift towards higher denomination banknotes, particularly 1,000 and 500," the RBI said in its annual report. RTI activist Manoranjan Roy, who sought information on the number of notes printed by the RBI, found that the big denomination notes are in huge demand. Economist Ajit Ranade tried to explain the demand pointing at the near double-digit inflation for the last two years. "The same lifestyle today requires 10-20% more money." he said. K Gayathri from the Institute of Social and Economic Change, Bangalore, added that the growing economy had put more money in people's hands, especially those from the manufacturing and service sectors. Consequently, spending too had gone up. Companies that run ATMs too say they are stocking more money in the machine trays as the "average ticket size" (simply put, the one time withdrawal) has ballooned from Rs 5,000 to Rs 7,000 approximately in the last three years. "Cost of living has gone up, the rise in our aspirations and desires push up demand for cash," said Mani Mamallan, chief marketing officer of C-H Technologies that manages ATMs for the State Bank of India. Currency in circulation is the largest component of reserve money and is primarily determined by demand. "There was acceleration in currency in circulation in 2010-11 due to increased demand due to economic growth, high inflation and low yield on deposits," said RBI officials. 

TOI

Obituary

Shri.Babul Sukumar passed away on 29-11-2011. He was Deputy General Manager in Central Pension Cell in B K C, Mumbai. He was born on 12-9-1953 and had served in several Offices of the Bank and in several centres. He was a truly genial and helpful Officer - especially at the time of getting the P J Gold Coins he was very helpful. He leaves behind hundreds of good friends in the Bank.

Shri.M.O.Jacob passed away in Trivandrum on December 5,2011. He was 85 years old. He retired on 31-12-1985. He held the post of the Secretary of the R B I Employees Association, Trivandrum for several decades.

As reported by P.P.Ramachandran (via e-mail)

At CMs’ meet, Munda flays delay in setting up of State Cooperative Bank

During a conference of the Union Finance Minister and Chief Ministers of eastern States in Kolkata on Saturday, Jharkhand Chief Minister Arjun Munda expressed concerns over the delay in establishing a State Cooperative Bank in the last 11 years. He complained that the two nodal agencies, RBI and NABARD, have not taken any step in this direction. Munda made two specific demands - the State Bank of India and Bank Of India must open a branch in Ranchi and these must be headed by a Chief General Manager and General Manager so that they can effectively coordinate with banks in Jharkhand for better financial inclusion. Munda said that due to absence of a State Cooperative Bank around 39 lakh farmers have been facing problems obtaining easy loans. “Only nine lakh farmers have a credit card while the rest are forced to approach moneylenders,” he said.  Munda requested Finance Minister Pranab Mukherjee to instruct public sector banks to provide loans to farmers assuring all support from the State Government. Stating that only 9,562 non-farmers in Jharkhand have been given loans, he said urgent steps must be taken by the Central Government in this regard.  Criticising the functioning of public sector banks in Jharkhand, Munda said that the banks are supposed to reserve at least one per cent of the total amount of loan to be given to poor under a differential rate of interest whereas it is merely 0.44 percent. He said that the percentage of loans given to weaker sections of society and the SC and ST has fallen from 8.7 per cent to 5.25 per cent during this fiscal year. He said most of the villages of Jharkhand having a minimum population of 2,000 should have been provided with banking facility under the financial inclusion scheme. “There are 1,541 such villages against which only 904 villages have been covered under the banking correspondence scheme. Even these are not working properly,” Munda said. 

The Pioneer

Bring banking services under Right to Service Act: Modi

PATNA: Bihar deputy chief minister Sushil Kumar Modi on Saturday urged the RBI to bring the banking service procedure under the provision of Right to Services Act so as to maintain transparency in disbursal of loans. Addressing a meeting of chief ministers of eastern states convened by Union finance minister in Kolkata, Modi said the banks keep loan applications pending for long and then reject them. The banks do not maintain a register about approval and non-approval of loans, he said and suggested computerization of loan application processing to reflect the delays on the part of the banks in disposing of the applications. According to Modi, the banks provided only 53% of the 15 lakh Kisan Credit Cards which they were asked by the central government to provide to farmers in Bihar in 2010-11. In the current financial year too, the rate of disbursal of KCCs is not satisfactory, Modi said and added the farmers should be provided ATM cards along with KCCs and the loan amount through the KCC should be increased from Rs35,000 to Rs50,000. The Centre has so far made available only Rs265.06 crore out of Rs595.64 crore required for revival of primary agriculture credit societies and cooperative institutions in Bihar, Modi said and complained to the Union finance minister about slow pace of computerization of district cooperative banks by the Nabard. Modi also suggested creation of Education Credit Guarantee Fund for providing education loans.

TOI

Pranab pleads for rural banks in east

... Earlier this week, the RBI Governor D. Subbarao at a meeting with Bengal chief minister Mamata Banerjee and finance minister Amit Mitra had also urged the state government to recapitalise the three RRBs...........

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ASSOCHAM emphasises need for overall review of definition of ‘priority sector’ lending

...... In a communication to the Nair Committee constituted by The Reserve Bank of India (RBI), the chamber said that there is a high degree of necessity to include sectors like infrastructure, logistics, health and services in the definition of ‘priority sector.’.........

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RBI wants stay on CIC order on Panipat resident's RTI plea

PANIPAT: Reluctant to reveal the names of top 100 bank loan defaulter businessmen of the country, the Reserve Bank of India (RBI) has filed a petition in the Delhi High Court, seeking a stay on the orders passed by the Central Information Commission (CIC). On November 15, CIC, while deciding a petition filed by local RTI activist P P Kapoor, had directed the RBI to provide him the names of defaulters by December 10 and upload these on the bank's website by December 31. In the petition, Kapoor had challenged the denial of information by the bank. Kapoor had sought the details from the bank in August last year, but was denied on the grounds that RBI held these in 'judiciary capacity'. However, the CIC directed the bank to post on its website complete information on all such industrialists as part of suo-motu disclosure mandated under Section 4 of the RTI Act before December 31 and asked it to update it every year. The RBI had objected to making the information public, saying "it is held by it in fiduciary capacity and disclosing it will adversely affect economic interest of the state". Information commissioner Shailesh Gandhi agreed that information was 'fiduciary in nature', but said that such exemption did not stand when there was larger public interest in the disclosure. After his RTI query was dismissed by the RBI, Kapoor filed the petition with the Central Information Commission, which on October 12 summoned the public information officer of the RBI to appear before it on November 8 with all relevant documents. The commission held a hearing on the said date, but the verdict was withheld. Kapoor said the information was sought by him in the larger public interest as revealing the names of the defaulters could force them to return the money of the public sector banks. 

TOI

How to get your Banking Problems Solved by Ombudsman

....Banking Ombudsmen participate in various awareness campaigns under Financial Inclusion and Literacy Programme and visit a number of villages in various Districts under respective territorial jurisdiction of the BOs. Participation in various important fairs and festivals in the State, face to face interaction with members of public at various places at block level, participating in seminars organised by Government of India in association with RBI are some of the other initiatives undertaken by the Officers of BOs.....

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Rs 2,150,000,000,000: that’s our gold import bill this year

............ In fact, the doughty Indian is stocking up on gold for the same reason the Reserve Bank of India (RBI) did in November 2009, when it bought 200 tonnes from the IMF – to preserve the value of wealth. With the future of the euro and the dollar uncertain, it made sense for the RBI to diversify. In its forex kitty, the best returns have come from gold..............

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Toss between safety & return

............ Interest rates seem to have peaked and going ahead, yields should stabilise. The Reserve Bank of India is not expected to carry out further rate hikes, as it can adversely affect growth. Therefore, if you’re looking to diversify your portfolio by adding a dollop of debt investments, ultra short-term income funds could be a wise choice.

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Banks lure gold buyers with plastic

.......Banks seem to be cashing in on the craze for gold by promoting credit and debit cards with such offers such as iPads. The strategy is paying off as buyers are happy swiping plastic cards at jewellery outlets...........

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Islamic Banking: Developed by Indians, flourishing in other countries

......... "The non-availability of an interest-free banking option has distanced many Muslims from banking products and services. The Reserve Bank of India (RBI) data report for March 2010 indicates that banking participation in Muslim- concentrated districts is below the national average. They lack in banking access, infrastructure availability and low credit-deposit (CD) ratio",..........

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Persistent food inflation warrants monetary policy responses: RBI

PUNE: Reserve Bank of India Deputy Governor Subir Gokarn said that the drivers of food inflation has changed from the pair of sugar and cereals during the last four decades of the previous century to proteins and fruits and vegetables during last four years. He also asserted that the situation of persistent high food inflation warrants monetary policy responses to keep the overall inflation in check.  Mr Gokarn was delivering the Kale Memorial lecture at the Gokhale Institute of Politics and Economics (GIPE) today on 'Food Inflation: This Time It's Different.'' "The more worrying attribute of food inflation is persistence. In the four decades in 1960's, the drivers of food inflation were cereals and sugar with a supporting role being played by proteins and fruits and vegetables in the second half of the period,"said Mr Gokarn, adding, "While contribution from proteins has gone down somewhat in 2011-12, which is the basis of the declines we have seen in food inflation in the msot recent date releases, the pressure from fruits and vegetables have sustained."  Mr Gokarn said on the demand side that people eat better as they get richer is a simple assertion. But on the supply side, we have problems. The productivity of pulses has oscillated around 600 kg/hectare for the last decade and a half. "There are several states, in which pulses may constitute an important part of the typical diet, whose productivity is significantly below the national average. If overall productivity is to be improved, a strategy which focuses on the specific bottlenecks in these states is probably the best way to go about it,"he said. Mr Gokarn pointed out the rising wages of agricultural labour and the stocks of agricultural commodities as two important factors exerting influence on their prices. "Wages rising faster than productivity can only result in rising prices, if producers cannot substitute other inputs for labour. There is important relationship between price dynamics and stocks. Periods in which stocks have been high, show relatively low rates of price increase," he said. Lastly, he pointed out the declining trend in the long period average (LPA) of monsoon rainfall. "This means that normal monsoons are delivering less water than in the past. He said that the implication of persistent supply pressures on the economy are not very good for maintaining balance between fast growth and low inflation. "While transitory episodes of food inflation do not warrant a monetary policy response, there are strong justifications for acting in the face of more persistent ones, if the objective is to keep overall inflation in check. 

ET 

Financial leadership of the west has caused global crisis: Duvvuri Subbarao, RBI Governor

KOLKATA: RBI Governor Duvvuri Subbarao blamed the financial leaders of the West for letting the so-called innovations cause the second global crisis in less than three years even as European leaders scramble to fix the two-year-old sovereign troubles. "There is a vacuum in financial leadership globally," Subbarao said on Friday in Kolkata at a CII leadership summit. "They lacked foresight to see problems of financial innovations. We have gone through one crisis, and I am scared of saying we are going through another." Nearly two years after Euro leaders started to contain the debt turmoil, their fifth effort led to the creation of $267-billion warchest and evolved rules to curb recurrence of the fiscal mess. They advanced the beginning of an 500-billion euros rescue fund to next year and scrapped the demand that bondholders share losses in sovereign rescues.  These troubles in the global financial markets pose challenges to local financial stability. But despite the pressures of financial meltdown, he may stick to taming the inflation priority, over slowing economic growth.  "I am sensitive to difficulties faced by the corporate sector, because of high interest rate and unfavourable exchange rate. I am also sensitive to poor people who are hurt by inflation," he said at the inaugural session of the two-day event, organised jointly by CII and Suresh Neotia Centre of Excellence for Leadership.  The rupee has depreciated over 14% since early August due to global destabilising factors and the governor said the fall in local currency has put additional pressure on inflation, which still remained high despite RBI's policy of monetary squeezing.

ET

Inflation would have been higher if not for monetary tightening: RBI chief

...Defending the RBI's aggressive monetary tightening, which has drawn criticism for its impact on growth, Dr Subbarao said, “It is a legitimate concern that inflation has not come down appreciably despite hikes in interest rate 13 times since March 2010, but it has to be noted that the rate of price rise would have been even higher had monetary tightening steps not been taken......

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Subbarao acknowledges cash crunch facing banks

.........Reserve Bank of India governor Duvvuri Subbarao on Thursday said there are liquidity constraints across the system. His comments came amid growing concerns that domestic liquidity condition will remain stretched for some time more.Interestingly, Subbarao’s comments came close on the heels of RBI deputy governor Subir Gokarn on Wednesday reportedly indicating that the apex bank will refrain from cutting the amount the banks need to set aside as reserves...............

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Probability of global recession low: D Subbarao, RBI Governor

KOLKATA: The probability of a global recession is low, even though the US is growing slowly and Europe is experiencing negative growth, RBI Governor D.Subbarao said today. "The probability of a global recession, I think, is low," he said at a CII event here, adding that even though India's growth rate is falling, this cannot be termed as recessionary. "The US is not growing remarkably, but slowly. Europe is experiencing negative growth and Japan is also recovering," he added. On the challenges currently facing the country, he said the RBI's job is to strike the right balance between growth and price sensitivity. "I am sensitive to 80 per cent of the people of the country who are affected by price rise. We will have to balance the concerns of the corporate leaders crying against interest rate hikes and the poor." Subbarao said it is a legitimate concern that inflation did not come down appreciably despite hikes in the interest rate 13 times since March, 2010, but maintained that the rate of price rise would have been even higher had monetary tightening steps not been taken. "It is a valid criticism. Had the RBI not acted, inflation rate now would have been 12 per cent or 13 per cent and not 9.7 per cent at the moment," he said. On capital account convertibility of the rupee, he said it would not take place unless there was fiscal stability, more developed financial markets, stable growth and steady inflation.

ET

India Inc: Don’t blame govt, blame yourselves for current mess

.................The most telling incident of all was in January 2005, when then RBI governor, Dr YV Reddy, mentioned some kind of tax on FII flows. The same evening, Finance Minister P Chidambaram announced on television that no tax was being considered. The sensitivity of FII flows to the government’s actions was driven by corporate India, which was the beneficiary of those flows at that point of time........

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Sadhna : A Women’s Handicraft Enterprise of Sewa Mandir Awarded at National Level

The Annual Function of Citi Micro Entrepreneur Awards 2011 held at Mumbai on 5^th December saw an award for Udaipur. Sadhna, a women’s handicraft enterprise from Udaipur conquered the title of ‘National Winner – Community Owned Enterprise’ among the 77 nominated organizations from all over the country. Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India presided over the event in which 10 winners were honored in the category of National, Regional, Youth, Innovative, Green and Community owned entrepreneurs. The winners were presented with a trophy, a citation and cash prizes amounting to Rs. 1.87 million.

Udaipur Times

State entrepreneur

IMPHAL, Dec 9: State entrepreneur Wangkheirakpam Memi Devi has been conferred with Citi Micro Enterpreneur award.  Memi received the award, which comprises of Rs 50,000 and a citation, from Reserve Bank of India Deputy Governor Dr KC Chakrabarty in a grand award ceremony held in Mumbai recently. Memi who is the first recipient of the award among North East entrepreneurs was selected for the award in the Innovative Enterpreneur section. Chanura Microfin Manipur will organise a reception function in her honour at the auditorium of Jawaharlal Nehru Manipur Dance Academy tomorrow. 

The Sangai Express

COINEX Exhibition holds many attractions

Pune : The fact that many people in the city take their hobby of collecting ancient coins very seriously was proved on Saturday when a rare silver coin from the era of Mughal emperor Jehangir fetched a whopping Rs 90,000. The event was the auction of antique coins, banknotes and medals at Coinex Pune 2010, a numismatic exhibition. The highest bid amongst banknotes was for an Indo-Portuguese one, at Rs 22,000. A Commander of the Order of the British Empire medal fetched Rs 41,000, the highest for medals. From Gulbarga Sultanate coins estimated at Rs 800, gold coins from Aurangzeb's period estimated at Rs 30,000 and extremely rare punch marked Kuntala Janapada coins at Rs 1 lakh, the auction had 244 fine to rare lots up for bidding. Conducted by Girish Veera, a numismatist and owner of Oswal Antiques, Mumbai, the auction saw around 60 serious buyers and many enthusiasts. “We had considered 80 per cent sale of the items displayed, but it shot up to 88 per cent. The auction got unprecedented response. What was more encouraging was the greater awareness among the collectors,” said Veera, who auctioned for the fourth time in the city. Rare lots that had fervent bidding were copper coins from Shivaji's period with 'Chhatrapati' on the obverse and 'Shri Raja Shiva' engraved on the reverse. These were estimated at Rs 1,500 but were sold for Rs 7,500. Another coin in the name of Shah Alam II, with engravings in Devnagari and Urdu, fetched Rs 22,000. “Antique coins provide a good investment option. If the investors buy the coins from reputed dealers and invest wisely, good returns are guaranteed. Antique coins are invaluable and with the prices of both the yellow as well as the white metal, skyrocketing it has increased the demand also. As most of these coins are made in gold or silver one can expect a return of 36-40 per cent per annum,” said Veera.

Sakaal Times

Fake currency of Rs 12 cr face value detected till Sept

The Reserve Bank has detected 2.64 lakh pieces of fake currency notes with the face value of Rs 12.25 crore up to September this fiscal, Parliament was informed today. In a written reply in the Lok Sabha, Minister of State for Finance Namo Narain Meena said between April and September 2011, the banking system has detected 2,64,282 pieces of fake currency notes of face value Rs 12,25,70,560. In the 2010-11 fiscal, 4,35,607 pieces were reported, having face value of Rs 19.01 crore, he added. Meena further said that RBI, Finance Ministry, Home Ministry, security agencies as well as CBI are working together to address the menace of fake currency notes. "The works of these agencies are periodically reviewed by a nodal group set up for this purpose. In this context, CBI has also been declared as the nodal agency for coordination with the states and the Directorate of revenue Intelligence has been nominated as the Lead Intelligence Agency for smuggled fake notes," he said. Besides, National Investigations Agency has been empowered to investigate and prosecute such offences, he said.

BS

India needs Islamic Finance for infrastructure development: Experts

......Answering questions from journalists, Mr Khurshid Najmi, former joint advisor, RBI and presently Partner, India Law Services said that High level Committee on Financial Sector Reform-CFSR of the Planning Commission of India (2008) headed by Dr Raghuram Rajan has recommended interest free finance & banking to be introduced in the main banking sector for growth with inclusion and innovation............

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Ready for 6.5 per cent? - T N Ninan

…..Corporate investment will not revive till interest rates have dropped some way down, and a cautious Reserve Bank that believes in “baby steps” will take months before it brings down interest rates to levels that change the calculus on business risk. So a 6.5 per cent rate of growth in 2012-13 seems plausible, even probable……

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RBI notifies new FDI norms for pharma sector

The Reserve Bank on Friday notified new rules doing away with automatic approval for foreign direct investment (FDI) in existing pharmaceutical companies. Tightening the norms, the government had last month done away with automatic approval of FDI in the existing pharmaceutical companies. "FDI, up to 100 per cent, would be permitted for brownfield investment (i.e. investments in existing companies), in the pharmaceutical sector, under the government approval route," RBI said in a notification. Under the new rules, for any merger or acquisition, the overseas investor will have to seek permission from the Foreign Investment Promotion Board (FIPB). After six months, it will be the monopoly watchdog Competition Commission of India (CCI) which will vet such deals. The decision follows directions from Prime Minister Manmohan Singh, who along with his senior Cabinet colleagues had deliberated on October 10 over concerns arising out of several acquisitions of domestic pharmaceutical companies by overseas firms. For the new investment, 100 per cent FDI will be allowed under the automatic route, under which investors only inform the Reserve Bank about the inflows and no specific government nod is required. "FDI, up to 100 per cent, under the automatic route, would continue to be permitted for green field investments in the pharmaceuticals sector," RBI said.

Business Today

Bank deposit growth outpaces credit

......…RBI has projected a deposit growth of 17 per cent and credit growth of 18 per cent by the end of March 2012. But the current trend suggests otherwise…..
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Banks to compensate customers for delays at prevailing rate

Mumbai, Dec 9 : Banks should compensate customers on account of financial loss incurred due to late receipt or delayed credit of interest at the prevailing rate, the Reserve Bank of India said today. An investor of savings bonds has to be compensated at the savings bank rate on financial loss incurred due to late receipt or delayed credit of interest warrants/ maturity value of investment, RBI said in a notification. The interest rate on savings deposits have been recently deregulated. RBI said the banks shall compensate investors for delays as per their saving account rate without any discrimination.

MSN News

Luring deposits, the unfixed way

.....Some banks have, however, taken to a novel way of rewarding their depositors. They have come out with a new term `unfixed deposits' ...........

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HC stays CIC's order asking RBI to reveal loan defaulters

New Delhi, Dec 9 : The Delhi High court today stayed the direction of the Central Information Commission (CIC) asking the Reserve Bank of India to provide details of industrialists who have defaulted in repayment of loans taken from nationalized banks. A bench of Justice Vipin Sanghi, in its interim ex-parte order, asked the information-seeker to respond to the petition filed by the RBI challenging the CIC order. The court listed the next hearing on February 27, 2012, on the RBI's petition which said the CIC's directives were in violation of the Right to Information Act. The CIC had on November 14 this year under section 8(2) of the RTI Act directed the RBI to provide the information sought by information-seeker P P Kapoor by December 10, 2011. Counsel T R Andhiyaarjuna, appearing for the RBI, contended the CIC's order would have a far-reaching impact as this kind of information is confidential and the Information Commissioner has dealt with the matter in a wrong way, without considering all the relevant provisions under the RBI Act. He also said the order of the CIC directing the RBI to provide information was beyond its jurisdiction under the transparency law, as the RBI is exempted from providing such info under section 8(1)(a). "It's not open to the CIC to issue such a direction under section 8 (2) of the RTI Act when the RBI is exempted under section 8 (1) (a)," he added. 

IBN Live

RTI Blues: HC gives respite to NABARD

The Delhi High Court on Thursday stayed an order of Central Information Commission (CIC) asking National Bank for Agriculture and Rural Development (NABARD) to provide copies of its inspection reports about cooperative banks of various states to an information seeker under the transparency law. bench of Justice Vipin Sanghi stayed the operation of CIC’s order asking NABARD to reveal inspection reports from 2005 till date to the applicant under the Right to Information Act keeping in view its earlier similar order in which it has provided same relief to RBI. Apart from inspection reports of various cooperative banks, the information seeker Kishan Lal Mittal has also sought copies of correspondence with Maharashtra government, RBI or any other agency regarding Maharashtra State Cooperative Bank. Earlier, the Public Information Officer (PIO) had refused to provide information on the ground that under section 8 (1) (a) of the RTI Act, disclosure of such reports would adversely affect the economic interests of the state. In appeal, the Information Commissioner directed the bank to provide the copies of the inspection reports before 10 December 2011. The court listed the matter for further hearing on February 13, 2012. The High Court had on November 30, stayed the CIC order asking RBI to provide copies of its inspection reports about a bank to an information seeker under the transparency law. The court had stayed the operation of CIC’s order asking Reserve Bank of India to reveal inspection reports of Makarpura Industrial Estate Cooperative Bank Ltd under the Right to Information Act.

http://indiancooperative.com/lawslegislations/rti-blues-hc-gives-respite-to-nabard/

RBI asks Banks to cover one lakh SHGs by 2012

The Central Board of Directors of the Reserve Bank of India has directed Banks to make an effort to cover at least one lakh Self-Help Groups (SHGs) by March 2012. There are total 1.55 lakh SHGs to be credit linked in the State, out of which 29,622 SHGs have already been covered by banks. The decision was taken at the Central Board of Directors meet in Kolkata on Thursday. Dr. D. Subbarao, Governor, Reserve Bank of India chaired the meeting. All the 7486 villages with population of more than 2000, will be covered by banking facilities by March 2012 under the Financial Inclusion Plan. Banks had already covered 4348 villages by November 2011, RBI said. The Central Bank has directed the state government of West Bengal to support its initiative of extending electronic benefit transfer (EBT), to begin with, in four districts where pilot project had already been initiated. EBT facility will be extended to all the districts in West Bengal covering all villages. Banks are asked to work out modalities with the active support of State governments in this regard. RBI will conduct a survey in West Bengal to assess the ground realities with regard to loans to be availed by General Credit Card holders. The survey will be conducted in partnership with State government and banks in four districts including Murshidabad, Howrah, Malda and North 24-Parganas. The survey would be completed by end-December 2011. Based on the findings of the survey, the SLBC will decide on the way forward. RBI has also asked Banks to achieve credit deposit (CD) ratio of 65 per cent by the end of March 2012. Current CD ratio in the State was 62 per cent which was significantly lower than the national average of 74 per cent. RBI said that a higher target for CD ratio to be achieved during 2012-13 would be reviewed after that but would largely be subject to demand for large corporate credit. The urgency of extending State contribution for recapitalisation of the three Regional Rural Banks (RRBs) in West Bengal necessary for their improved performance was reiterated during the meet. In order to give boost to credit in the State and to ensure district level participation, the Chief Minister has agreed to attend one State Level Bankers’ Committee (SLBC) meeting in the next three months. Further, it was also decided during the meeting that the District Magistrate, Regional Managers of banks and officials of the Reserve Bank will attend the District Consultative Committee meetings to encourage credit enhancement and financial inclusion at the district level.

http://www.microfinancefocus.com/

Ignoring grim short-term with long-term optimism

..........When the Reserve Bank of India was busy raising interest rates to control inflation — it did so 13 times in 20 months — in an attempt to squeeze speculative or non-essential demand out, Indian householders were busy doing exactly the opposite........

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Go for PPPs in agriculture

....Interestingly, the Deputy Governor of RBI recently commented that, while agricultural credit has grown, it is more from the urban and metropolitan branches of the banks, which raises the question as to which segment the credit is actually flowing to......

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Tackling informal collateral and collateral substitutes in Indian microfinance

The RBI must ensure that informal collateral and/or abusive collateral substitutes do not contaminate microfinance in the future. It should also seriously think on incentives/disincentives that can be set up to eliminate use of informal collateral and/or abusive collateral substitutes, where they exist..............

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